Spotless chief executive Bruce Dixon, who last month announced he would step down from his top corporate job to help his son, Michael, with his hospitality businesses, will have another high-profile pub to work from, this time in Albert Park.
Dixon Hospitality Group has purchased the leasehold of the Vincent Hotel at 107-111 Victoria Avenue, a venue known between 1889 and 2005 as the Red Eagle.
The operator's other recent acquisitions include the Hawksburn Hotel in Toorak, the Wayside Inn in South Melbourne and Station Hotel in Footscray.
Mr Dixon's 13 million Spotless shares are reportedly worth nearly $30 million. He plans to leave the company in seven months, but will stay on its board.
Colliers International's Pat Connolly, who negotiated the deals, said other independent pub operators were also active in the sector.
Greg Fee and his business partner last year sold South Melbourne's Wayside Inn and Station Hotel in Footscray and took both the freehold and leasehold of the Royal Hotel in Bacchus Marsh.
Around the same time Colonial Leisure Group purchased the Albert Park Hotel.
Mr Connolly said good pubs with a stable business were trading on a multiple of two to three times earnings.
Hotel brokers active in the leasehold going-concern pub market suggest it has become two tiered, the latest non-gaming hotel report compiled by the Australian Property Institute and Herron Todd White says.
Hotels offering secure cash flows, refurbished accommodation and strong remaining tenure were selling on yields between three to five times earnings, the report said. Those with older accommodation, declining cash flows and limited tenure were generally purchased by opportunistic buyers, rather than along traditional multiples.
JLL's Mathew George said leaseholds were changing hands at significantly lower than prices than vendors expected. An average return between two to three times earnings was common, he said.
The leasehold for The Coopers Inn in Exhibition Street settled this week for $625,000 with about 17 years left on lease, achieving a multiple of 2.5 times net earnings after rent. Property group Investa holds The Coopers' freehold.
Increased competition from other liquor-serving venues was having a significant impact on the "run of the mill meat-and-three-veg pubs", requiring astute owners to create a point of different and market their pubs through social and other media, Mr George said.
The market for leasehold going concern pubs had struggled in recent times but had started to pick up in the middle of 2014, the API report said.
On the freehold side, well-located metropolitan investment pubs with experienced operators remain in demand, trading within a yield range of 6 to 8.5 per cent depending upon the strength of investment fundamentals, it said.
